Alpine High field

From Global Energy Monitor

National / project context

The recently discovered Alpine High oil and gas field sits in a part of west Texas's Permian Basin long-ignored by drillers, but well-situated to export oil and natural gas through newly built pipelines to Mexico. The Permian Basin has been drilled more than any province on the planet,” Robert Bryce, an Austin-based journalist who reports on the oil industry, observed. “And yet the more the oil companies drill in it the more oil they find.” Nearly 30 billion barrels of low-sulfur, or “sweet,” oil, known as West Texas Intermediate, have come out of this field, which is roughly the size of South Dakota, and much more oil remains. Factor in the fracking revolution, and the Permian Basin is arguably the hottest oil-and-gas play in the world.[1]

Projections of extraction and CO2

In 2016 Apache discovered the Alpine High field in west Texas, which contains an estimated 3 billion barrels of oil, 75 trillion cubic feet of natural gas, and natural gas liquids like ethane and propane, which feed plastics production. Assuming a conversion factor of .43 tonnes of CO2 per barrel of oil equivalent and 0.55 metric tonnes of CO2 per thousand cubic feet of natural gas, the field holds approximately 5.4 billion tonnes of CO2, of which 1.3 billion tonnes is in oil and 4.1 billion tonnes is in natural gas. The Alpine High field sits on the outer margins of the famously prolific Permian Basin, where in 2017, one out of every three barrels of shale oil in America was pumped.[2] In 2017, its first full year, Apache drilled 45 wells across Alpine High's 366,000 acres, the company's SEC filing shows, including four wells that the company did not categorize as successful. Apache has plans to drill about 5,000 wells in the Alpine High field.

Domestic drivers

Rystad estimates that, for the first time in history, the U.S. holds more oil reserves than either Saudi Arabia or Russia.[1] The Trans-Pecos Pipeline's proximity to Mexico makes it potentially an important part of the U.S.'s plan to become a net energy exporter. Furthermore, the Trump Administration's rollback of many environmental regulations is creating an "anything goes" environment in the U.S. energy sector, in which companies are moving to take advantage of more favorable regulatory schemes.

Infrastructure

Houston-based Energy Transfer Partners was in the process of building the Comanche Trail and Trans-Pecos Pipelines for exporting gas to Mexico when the Alpine High field was discovered. These pipelines are now operational.

Subsidies

Using industry data purchased from Rystad, the Seattle-based Stockholm Environment Institute calculated how big an impact subsidies make on how much drillers can earn from a field. The rate of return on a drilling site in Texas’ Permian Basin, for instance, increases on average from 7.5 percent to 18.5 percent after subsidies are factored in. Because the industry considers a 10 percent rate of return the minimum required to proceed with drilling, the aid makes a huge difference.[3]

Oil companies involved

Drilling rights to the Alpine High Field are owned by Apache. The two new pipelines that traverse the Trans-Pecos region are owned by Energy Transfer Partners.

Finance

In 2017 dozens of groups sent US Bank a letter demanding an end to its financing of Energy Transfer Partners (ETP). Instead, US Bank doubled down and joined a massive new credit facility for ETP.[4]

Corruption issues

Texas's system for permitting drilling and pipelines construction is extraordinarily lax, and oversight of operations is weak and sporadic. No permit is required to build a commercial natural gas pipeline in Texas, only a permit to operate—issued without review by the Texas Railroad Commission (TRC). This permit is acquired through a paper application, and the TRC does not hold public hearings on proposed pipelines.

Many opponents of the pipeline have questioned why the international Trans-Pecos Pipeline has been largely classified as an intrastate project for purposes of permitting.[5] As Alyce Santoro noted in a May 14, 2015 op-ed in Truthout: "Why is this multibillion-dollar pipeline allowed to be classified as an "intrastate" one - with all protections from national oversight this affords - when the project is being touted very publicly as an international one? ETP has been granted a T-4 permit from the Texas Railroad Commission - the only permit required of intrastate projects - claiming that their pipeline will serve as a 'common carrier' or 'gas utility.'"[6]

Construction and maintenance of the Trans-Peco Pipeline was overseen by a consortium of energy companies including Energy Transfer Partners (ETP), MasTec Inc. and Carso Energy. These companies are owned by Kelcy Warren and Carlos Slim—two of the richest men in the world. As of April 2018, Slim owned 15% of the New York Times.[7]

Tax Revenue

Texas's oil and gas revenue goes funds state and local government, and public school systems. Despite record oil and gas revenues in 2016, the state's school system ranked 37th in the United States for student achievement.[8]

Human rights

Letters requesting access from landowners for the Trans-Peco Pipeline were vague on location and threatening in tone. Pipeline surveyors were caught trespassing on private property.[9]

Local Opposition

Domestic Eminent Domain for International Pipeline?

As natural gas and crude oil produced in Texas are increasingly exported, environmentalists, property rights advocates and legal specialists are promoting a novel legal argument to block pipelines, asserting that projects that help ship energy out of the country don’t benefit the American public and should not be eligible for eminent domain takings. In fact, they note, exporting energy may hurt the public’s interest by decreasing domestic supplies and raising costs.[10]

Opposition to Trans-Pecos Pipeline

West Texas Action Against the Trans Pecos Pipeline SD

The Trans-Pecos pipeline was opposed by ranchers, indigenous people, landowners, and other affected residents of the Big Bend area, and by national and local environmental groups, led by the Big Bend Conservation Alliance (BBCA). In June 2016 a group of 100 celebrities including Texans Peter Coyote, Tommy Lee Jones, musician Ray Wylie Hubbard, and Randy Jackson signed their names to an open letter that ran in The Dallas Morning News, voicing their objection to the Trans-Pecos.[11]

The BBCA has voiced these concerns about the pipeline:[9]

  • The proposed Trans-Pecos Pipeline (TPP) is to be a high-pressure 42-inch diameter transmission pipeline intended to transport massive quantities of fracked natural gas to power plants in Mexico—enough to power a city of 6.6 million people annually.
  • The pipeline is slated to run south from a hub near Coyanosa—through Pecos, Brewster, and Presidio Counties—cross into Mexico at the Rio Grande 12 miles above Presidio and continue to El Encino, Chihuahua, where it will split—one branch going to La Laguna, the other to Topolobampo on the West Coast.
  • The TPP was planned by the Mexican Federal Energy Commission to be part of Mexico’s energy infrastructure—a portion of 10,000 miles of pipeline being built to fuel more than 20 new power plants in Mexico as a component of their energy reform.
  • Aside from U.S. pipeline companies, the project will only benefit Mexico and will re-invigorate the U.S. fracking industry, an environmentally damaging method of extracting natural gas from shale. Increased exports of natural gas would also drive up U.S. electricity prices and encourage further use of dirty coal power.
  • The TPP is likely part of a much larger plan not being publicly discussed. Because the pipeline will terminate on Mexico’s west coast, it may play a role in a major trade agreement known as the Trans Pacific Partnership that will allow liquefied natural gas (LNG) to become a leading export item to energy-hungry countries like Japan.
  • The pipeline company claims TPP to be a “gas utility” so that it can condemn land from any landowners who resist. Essentially this land would be taken for use by Mexico.
  • Only a 1,093-foot segment of the pipeline, and associated infrastructure of the “transfer facility” at the Rio Grande, will require review under the National Environmental Policy Act. The remaining 143 mile length of the pipeline, passing through intact Chihuahuan Desert grasslands, requires no environmental or cultural review.
  • Not a single regulatory agency, at the local, State, or Federal level, has any significant jurisdiction. There is almost no opportunity for the public to weigh in.
  • The consortium’s bid of $767 million was almost half of what was budgeted for the pipeline, suggesting they may select materials and compressor station components based upon the lowest cost rather than safety or health concerns.
  • The proposed pipeline will have bi-directional capability and will be able to send or receive up to 1.35 billion cubic feet of natural gas per day.
  • The pipeline’s proposed route has it running along the northern edge of the town of Alpine and between the town and the rural subdivision of Sunny Glen.
  • Natural gas transmission lines place people and the land in jeopardy, especially in a seismically active area such as the Big Bend. The “blast zone” for a 42-inch pipeline is about three and a half football fields in distance from the rupture.
  • During construction, a 125-foot-wide swath of land will be excavated approximately 3 feet deep. Within that swath, a trench will be dug an additional 5 feet to accommodate the pipeline; the scale of ground disturbance will be unprecedented in this region.
  • Following construction, a 75-foot-wide permanent easement will be maintained; vegetative growth will be controlled by herbicide or brush-cutting equipment. Associated infrastructure minimally includes block valve and blowdown stations enclosed in chain link fences and a new network of roads.
  • Despite company claims that there are “no plans for compression in the initial project,” one or more huge compressor stations are likely to be built along the line to pressurize the gas. These loud, brightly lit stations run 24 hours a day; regular maintenance “blowdowns” emit huge amounts of natural gas and toxic chemicals into the atmosphere such as methane, benzene, toluene, sulfuric oxide, and formaldehyde.
  • Construction and maintenance activities will pose many ecological threats including water loss and possible contamination, soil erosion, habitat fragmentation, and the introduction of non-native, invasive plant species.
  • Water use during construction and hydrostatic testing of the pipeline will consume between 500 million and 1.5 billion gallons of water, most of which is non-recoverable.
  • Because no cultural resource review is required, pipeline construction will impact or destroy archeological sites along the route.
  • Very few jobs will be created as ETP will primarily bring in its own workers. Jobs that are offered locally are likely to be short-term.
  • Although ETP has said Presidio (or any municipality) could “tap into“ the pipeline, the required infrastructure to do so, at cost of between $7 and $12 million dollars, would be prohibitive.
  • The ad valorem tax ETP will pay counties is unlikely to offset the cost of damage to roads from heavy equipment or the upgrades needed for the Emergency Management Services to meet the additional risks of leaks and explosions. Nor will it offset the loss of revenue from impacts to tourism, the region’s economic mainstay. These tax payments are based on the value of the pipeline itself, which depreciates over time. Thus, the tax payments will decrease as the pipeline ages—and risks of leaks or explosions rise.

Environmental

Construction of the Trans-Pecos Pipeline damaged streams, creeks, and seasonal wetlands in its path, and destroyed a 5,000-year-old archeological site, according to environmentalists.[5] Environmentalists also point out the danger of committing to natural gas as a power source, and natural gas infrastructure. According to the Big Bend Group of the Sierra Club, "the name “natural gas” in itself is propaganda. It is actually CH4, or methane, a highly powerful greenhouse gas that is estimated to be more than 80 times more potent than carbon dioxide.[12]

Alternatives

Texas is a leader among U.S. states in wind energy,[13] and has strong potential to expand solar. The fact that much of the oil and gas in the Permian Basin is marked for export to Mexico underscores that Texas will increasingly be able to meet its energy needs through a mix of fossil fuels and renewables.

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